The Economics of Freedom: Theory, Measurement, and Policy Implications

222 Pages·2012·0.986 MB·English

by  Sebastiano Bavetta, Pietro Navarra

TheEconomicsofFreedom
Whatisfreedom?Canwemeasureit?Doesitaffectpolicy?Thisbookdevelops
anoriginalmeasureoffreedomcalledautonomyfreedom,consistentwithJ.S.
Mill’sviewofautonomy,andappliesittoissuesinpolicyandpoliticaldesign.
Theworkpursuesthreeaims.First,itextendsclassicalliberalismbeyondexclu-
siverelianceonnegativefreedomsoastotakeautonomousbehaviorexplicitly
intoaccount.Second,itdevelopsfirmconceptualfoundationsforanewstan-
dardinthemeasurementoffreedomthatcanbefruitfullycoupledwithexisting
gauges.Third,itshowsempiricallythatindividualpreferencesforredistribu-
tion and cross-country differences in welfare spending in Organisation for
Economic Cooperation and Development (OECD) countries are driven by
thedegreeofautonomyfreedomthatindividualsenjoy.Bymeansofaninter-
disciplinaryapproachandasophisticatedeconometricmethodology,thebook
takesanexplicitstandindefenseoffreedomandsetsthebasisforaliberalism
baseduponpeople,actions,andinstitutions.
Sebastiano Bavetta is professor of economics at the University of Palermo,
Italy,andvisitingprofessorofEconomicsandPhilosophyattheUniversityof
Pennsylvania,USA.HeisaresearchassociateattheCentreforPhilosophy
ofNaturalandSocialScience(CPNSS)attheLondonSchoolofEconomics
(UK),whereheobtainedhisPh.D.inPhilosophyofEconomics.Hehaspub-
lishedinvariousinternationaljournalsandhascoauthoredabookinItalian
(LiberalismintheAgeofConflict,2008).Hisresearchinterestsfocusonpolicy
andinstitutionaldesignandonthemeasurementoffreedomanditspolicyand
politicalimplications.Hehasextensivepoliticalandadministrativeexperience
inItalianlocalgovernmentalagencies.
PietroNavarraisprofessorofpubliceconomicsattheUniversityofMessina,
Italy,whereheisalsoDeputyVice-Chancellorinchargeofthebudget.Heis
alsovisitingprofessorattheUniversityofPennsylvania,USA,andaresearch
associateattheCentreforPhilosophyofNaturalandSocialScience(CPNSS)
at the London School of Economics (UK). He holds a Ph.D. in economics
from the University of Buckingham, UK. Professor Navarra coedited with
Ram Mudambi and Giuseppe Sobbrio Rules and Reason: Perspectives on
Constitutional Political Economy (Cambridge University Press, 2001) and
coauthored with them Rules, Choice, and Strategy: The Political Economy
ofItalianElectoralReform(2001).Hehaspublishedmorethan50articlesin
journalssuchastheJournalofInternationalBusinessStudies,PublicChoice,
European Journal of Political Economy, Oxford Bulletin of Economics and
Statistics, Economics of Governance, and Applied Economics. His research
interests embrace the measurement of freedom, the relation between polit-
ical institutions and economic reform, and the interplay between individual
empowerment,entrepreneurshipandeconomicgrowth.

The Economics of Freedom
Theory, Measurement, and
Policy Implications
SEBASTIANO BAVETTA
UniversitàdiPalermo,Italy,andLondonSchoolofEconomicsand
PoliticalScience,UK
PIETRO NAVARRA
UniversitàdiMessina,Italy,andLondonSchoolofEconomicsand
PoliticalScience,UK
CAMBRIDGE UNIVERSITY PRESS
Cambridge,NewYork,Melbourne,Madrid,CapeTown,
Singapore,SãoPaulo,Delhi,MexicoCity
CambridgeUniversityPress
32AvenueoftheAmericas,NewYork,NY10013-2473,USA
www.cambridge.org
Informationonthistitle:www.cambridge.org/9781107017849
©SebastianoBavettaandPietroNavarra2012
Thispublicationisincopyright.Subjecttostatutoryexception
andtotheprovisionsofrelevantcollectivelicensingagreements,
noreproductionofanypartmaytakeplacewithoutthewritten
permissionofCambridgeUniversityPress.
Firstpublished2012
PrintedintheUnitedStatesofAmerica
AcatalogrecordforthispublicationisavailablefromtheBritishLibrary.
LibraryofCongressCataloginginPublicationdata
Bavetta,Sebastiano,1964–
Theeconomicsoffreedom:theory,measurement,andpolicyimplications/Sebastiano
Bavetta,PietroNavarra.
p. cm.
Includesbibliographicalreferencesandindex.
ISBN978-1-107-01784-9(hardback)
1. Economics–Politicalaspects. 2. Liberty–Economicaspects.
3. Autonomy–Economicaspects. I. Navarra,Pietro. II. Title.
HB74.P65B382012
330–dc23 2012007321
ISBN978-1-107-01784-9Hardback
Cambridge University Press has no responsibility for the persistence or accuracy of
URLs for external or third-party Internet Web sites referred to in this publication
anddoesnotguaranteethatanycontentonsuchWebsitesis,orwillremain,accurate
orappropriate.
Toourparents

Contents
Listoftablesandfigures page ix
Preface xiii
1 Introduction 1
1.1 Choiceandthemeasurementoffreedom 3
1.2 Unresolvedquestionsandthebook’saims 6
1.3 Anoutlineofthestudy 10
I concepts and tools
2 ChoiceandFreedom 17
2.1 Theimportanceofchoice 17
2.2 Asimplemeasureofchoice 24
2.3 Thevalueofchoice 28
2.4 Choiceandfreedom 31
2.5 Difficulties 32
3 MeasuringAutonomyFreedom 39
3.1 Ashiftinperspective 39
3.2 Choice,deliberation,andautonomy 40
3.3 Potentialpreferences 43
3.4 Measuringeccentricopportunities 46
3.5 Awareness 49
3.6 Anaxiomaticmeasureofautonomyfreedom 54
4 TheEmpiricalMeasureofAutonomyFreedom 58
4.1 Introduction 58
4.2 Options,preferences,andautonomyfreedom 60
4.3 Achievementandautonomyfreedom 62
vii
viii Contents
4.4 Doesautonomyfreedomleadtocontrol? 65
4.5 Theautonomousperson 76
4.6 Wrappingupourresults 96
II autonomy freedom and the welfare state
5 WhyRedistribute? 101
5.1 Introduction 101
5.2 Theredistributionparadox 102
5.3 Socialmobilityandredistribution 105
5.4 Distributivejusticeandredistribution 110
5.5 Furthermotivationsforredistribution 113
5.6 Concludingremarks 121
6 AutonomyFreedomandRedistribution 122
6.1 Introduction 122
6.2 Autonomyfreedomandtasteforredistribution 124
6.3 Thedata 132
6.4 Theempiricalmethodology 138
6.5 Estimationandresults 142
6.6 Concludingremarksandpolicyimplications 149
7 AutonomyFreedomandWelfareSpending 154
7.1 Introduction 154
7.2 Incomeinequalityandwelfarespending 155
7.3 Autonomyfreedomandwelfarespending 164
7.4 Concludingremarks 173
8 Choice,Freedom,andtheGoodSociety 175
8.1 Freedomandthevalueofchoice 176
8.2 Choice,voluntariness,anddiversity 180
8.3 Thefreedoms’box 186
Bibliography 191
Index 201
Listoftablesandfigures
tables
1.1 TheStateoftheArtontheMeasurement
ofFreedom page 7
4.1 SummaryStatisticsandCorrelationMatrix 69
4.2 AutonomyFreedomandControl:FullSample 71
4.3 AutonomyFreedomandControl:DemographicPartition 72
4.4 AutonomyFreedomandControl:PoliticalPartition 73
4.5 AutonomyFreedomandControl:ReligiousPartition 74
4.6 AutonomyFreedomandControl:Geo-economicPartition 75
4.7 AutonomyFreedomoverTime–OECD 79
4.8 AutonomyFreedomoverTime–OECD 81
4.9 PercentageofAutonomousIndividualsover
thePopulation 84
4.10 PercentageofAutonomousIndividualsoverthe
Population:PoliticalPartition 85
4.11 PercentageofAutonomousIndividualsover
thePopulation:ReligiousPartition 86
4.12 AutonomousIndividuals:WhoAreThey?–FullSample 90
4.13 AutonomousIndividuals:WhoAreThey?–
Geo-economicPartition 91
4.14 AutonomousIndividuals:WhoAreThey?–Political
Partition 94
4.15 AutonomousIndividuals:WhoAreThey?–Religious
Partition 95
6.1 SummaryStatistics 133
ix